Balance of payments – commentary

2025 Q1

The current account ended 2025 Q1 in a surplus of CZK 122.4 billion. The financial account recorded a net outflow of funds (net lending) of CZK 105.7 billion owing to higher growth in external assets than external liabilities. The CNB’s reserve assets rose by CZK 30.4 billion (adjusted for valuation and price differences). The current account surplus was 1.8% of GDP on an annual basis, and the goods and services surplus was 6.5% of GDP.

Current account

Ratio of Current Account and Goods and Services Balance to GDP
(CZK billions, right-hand scale in %)

Note: Indicators calculated on the basis of annual moving aggregates

The goods and services balance recorded a surplus of CZK 169 billion in Q1. The balance improved by CZK 7.5 billion year on year at current prices. The goods balance ended in a surplus of CZK 137.8 billion, up by CZK 6.4 billion from a year earlier. The services balance also showed a surplus (CZK 31.2 billion), representing a year-on-year increase in the surplus of CZK 1.1 billion. This was due mainly to year-on-year growth in exports of professional services and management consultancy activities, services related to research and development, and technical services and trade-related services. Foreign travel recorded a surplus amid a year-on-year increase in exported and imported tourism services. The total goods and services turnover at current prices was up by 6.7% year on year in Q1, amid a rise in exports of CZK 88.8 billion and an increase in imports of CZK 81.3 billion.

The primary income deficit was CZK 44.9 billion in Q1. Its year-on-year improvement of CZK 8.7 billion was due mainly to higher year-on-year interest income from abroad. Dividends paid abroad amounted to CZK 21.3 billion, representing a year-on-year increase of CZK 9.8 billion.

Secondary income ended Q1 in a deficit of CZK 1.7 billion (a deterioration of CZK 7.4 billion on a year earlier). The widening of the deficit was adversely affected by a decline in the surplus on net income from the EU budget recorded in the secondary income balance and a deterioration in the balance of net non-life insurance premiums. 

The capital account

The capital account ended Q1 in a surplus of CZK 18.8 billion. The year-on-year rise in the surplus of CZK 16 billion was due to a combination of higher income from the EU budget recorded in the capital account and the year-on-year increase in the surplus generated from cross-border trading in emission allowances (non-produced non-financial assets).

The financial account

The financial account (including the change in the CNB’s reserve assets) recorded a net outflow (net lending abroad) of CZK 105.7 billion in Q1 owing to external assets increasing more markedly than external liabilities.

Ratio of Financial Account to GDP
(CZK billions, right-hand scale in %)

Note: Indicators calculated on the basis of annual moving aggregates

Foreign direct investment saw a net inflow of funds totalling CZK 52.6 billion. Liabilities transactions included an increase in the share of foreign owners in the reinvested earnings of domestic companies and growth in loans provided to domestic companies from abroad. The main factors on the asset side were an increase in the share of reinvested earnings by domestic owners in foreign subsidiaries and equity capital increases in foreign companies.

Portfolio investment recorded a net outflow of CZK 280.8 billion. This was related mainly to the sale of domestic bank bonds by foreign investors, which meant a drop in liabilities of CZK 169.5 billion, and sales of government bonds by non-residents (CZK 40.6 billion). On the asset side, there was above all an increase in foreign ownership interests and bonds held by domestic non-bank investors (CZK 46 billion).

Derivatives trading recorded a net inflow of funds from abroad totalling CZK 1.6 billion.

Other investment saw an inflow (net borrowing) of CZK 151.3 billion.

This outcome was significantly affected by a net inflow of CZK 159.4 billion in deposits.

The foreign exchange position of the banking sector (including the CNB) was driven mainly by the acceptance of short-term foreign deposits. The net inflow of funds was CZK 201.8 billion.

The position of other sectors recorded an outflow of CZK 50.4 billion due to the provision of mainly short-term assets to non-residents.

The CNB’s own transactions and transactions for CNB clients resulted in an increase in reserve assets of CZK 30.4 billion (adjusted for valuation differences).